Central Banks' Gold Holdings Rising: IMF


The Bank for International Settlements' gold holdings rose from 156 to 328 tons between December and January.

Some potentially interesting central bank data came from the latest edition of the IMF's International Financial Statistics. The Bank for International Settlements' gold holdings, which include the bank's own gold and also gold held on behalf of other clients, rose from a net 156 tons in December to 328 tons in January, says VM Group research for Fortis Bank Nederland—Metals Monthly April 2010.

Following are selected details of the Metals Monthly April 2010 report card on gold:

When gold fixed at $1,163.50/oz on April 12th, there was a case for saying it had hit a new all-time nominal high in global terms. Yes, it remained more than $50/oz, or 4.5% lower than its highest ever London fix of $1,218.25/oz on December 3, 2009 (the highest PM fix was $1,212.50/oz the previous day).

But the dollar is much stronger now than it was in December against most currencies—up 10% against the euro, and 9% on its "dollar index" (to 81.09 from 74.6). Thus in euros and many other currencies, the current gold price is higher than it was in early December 2009. . .

. . .this raises the question of which currency gives us the best indication of gold's real strength. If we use the IMF's Special Drawing Right, or SDR, which is a basket of dollars, euros, yen and sterling to give a broader measure, we find gold hit an all-time high of 762.48 SDR/oz on April 12th, 1% higher than in early December.

. . .One factor that hasn't been as supportive as we expected is physical demand. There are some signs that this is picking up in key markets. . .

. . .The major issue gaining market focus at the moment is Greece and its debt crisis. The eurozone rescue package agreed on 11 April, amounting to some €30bn, with additional funding from the IMF, eased the immediate sense of crisis. But clearly such packages can only buy time. . . in the longer-term this kind of crisis helps gold. . .

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe